Please tell me, what is blockchain and how does it work?

Please tell me, what is blockchain and how does it work?

People ask me frequently, “Please tell me, what is blockchain and how does it work?” I have been using various approaches and media answering this question, whiteboards, paper and even beer-coasters, and recently created a single page canvas combining all my scribbles and drawings to answer this question. This works very well, with great response and I like to share it including the story that goes with it. Maybe it is somewhat technical but most people follow the explanation quite well and really feel that they have learned something. Re-use is granted, but please keep it “as is” and respect the copyrights.

Doing business and transactions between organizations and people requires TRUST. Normally we do not think about this but every day we pay our invoices or buy goods with a debit- or credit card, issued by a bank or credit card company who guarantees these payments. These so called middleman are initiated, regulated and audited by governments giving us the required trust. But what if you could arrange this via technology providing us with the same guarantees as a middleman but without the middleman. This is where blockchain can help us, providing a mechanism to do business without knowing your counter party or their reputation. First used for Bitcoin transactions (crypto-currency) but suitable for any other transaction or contract that we want to register in an immutable and secure manner. Think about registering land property, music rights or mortgages.